Oil Marketing Companies are taking measures to limit the number of firms operating in the sector as well as restricting new entries.
In an interview on PM Express Business Edition, Chief Executive of Association of Oil Marketing Companies, Kweku Agyeman Duah disclosed that the move taken by the OMCs has influenced the growing number of practices said to be affecting industry and what can be described as “supervision challenges”.
“It appears some firms have secured the license from the regulator for other purposes rather than undertaking oil marketing business.” Mr Duah told host George Wiafe.
He added that the industry has also been hit by price undercutting, fuel smuggling and the association believes that a large number of oil marketing firms have also made it difficult for effective supervision.
“There are currently about 116 oil marketing companies in Ghana, however, it has been argued that the number is still high for a small economy like Ghana".
The association is also calling for a cleanup of the industry, similar to what happened in the banking industry. This will see the amount of licensing fees increased as well.
Is the oil marketing business under threat?
The industry is also calling for a strong regulation of the sector to help bring some sanity into the industry.
This is coming at a time that the Association of Oil Marketing Companies issued a statement, highlighting what can be descried as the “sorry state” of the industry because of the actions of some members.
Mr Duah also revealed that there are lots of OMCs that “are just around or exist in the books”, but are on the verge of collapsing.
“We need to have a level playing field that all members can compete effectively in the country.”
The coordinator noted that it also working to restrict the entry barrier, adding that the association is also trying to enhance business regulations in the sector to help guide industry practice.
Are Oil Marketing Companies involved in unfair pricing?
Some of the big players in the downstream industry have been accused of unfair pricing and what some will described as a cartel.
But responding to these concerns, Mr. Agyemang-Duah rejected these accusations.
He maintained that the competition in the industry will make it difficult for a cartel to be formed.
He however acknowledged that there might be one of two firms that are said to be undercutting by offering ridiculous prices.
“Being accused of cartel is a serious thing and if those who are making these accusations have evidence, then they should take it to the relevant authority for action.”
Covid-19 and Oil Marketing Companies
Mr Duah has described the impact of Covid-19 on the sector as very challenging, as it affected consumption and increased their cost of operations.
“For instance, we had to find a way everyday to sanitize the pumps as well as rotate personnel that came at extra cost.” he added.
Checking Fuel smuggling in Ghana
The National Petroleum Authority is currently working with the OMCs to introduce a remote surveillance system to monitor stocks and sale from the various service stations.
The initiative has been influenced by the high volume of fuel being smuggled as the state is losing over GH¢3 billion.
Mr Agyeman Duah noted this should being some sanity into the industry.
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